Many sellers of products and/or services provide significant discounts for “large orders”, i.e., orders of a given product and/or service of a threshold quantity and/or orders of a threshold total price. These large order discounts vary from seller-to-seller in terms of both the amount of the discount and the form of the discount. Large order discounts are typically offered by both traditional “brick and mortar” sellers as well as “electronic commerce” sellers. However, large order discounts are particularly prevalent, and seem to be an even more important component, in the electronic commerce environment where overhead is typically minimal and inventory management is often the key to success.
As one example, many sellers of products and/or services have tiered and/or volume pricing based on the number of units ordered/purchased and/or the regularity of service orders. Typically the more units ordered and/or the more regular the service, the greater the discount. To a large degree, it is tiered pricing and volume discount structures that allow high volume discount stores, i.e., “big box” stores such as Wal-Mart, to offer such low prices to their customers. Consequently, it is these same tiered and volume pricing structures, as well as the other discounts discussed herein, that has made it very difficult, if not impossible, for smaller stores, i.e., local “Mom and Pop” stores, to compete with the high volume discount stores. As a result, in many cases, local stores are rapidly becoming a thing of the past and these potential sources of healthy competition and local economic stimulus are currently disappearing at an alarming rate.
As another example, some sellers of products and/or services provide explicit and/or effective shipping discounts, or even free shipping, for large orders. This is particularly true in the electronic commerce environment. For instance, in some cases the shipping discount is explicit in that larger orders are simply charged less shipping in terms of real shipping costs paid, or as noted, not paid. In other cases the shipping cost is a flat rate, regardless of order size, so that, in effect, larger orders are charged less for shipping on a percentage of cost basis. These shipping discounts can be quite significant, and for many items shipping can be 25% of more of the total cost. In addition, in cases of specialty products that require special packaging and/or handling, the explicit and/or effective shipping discounts for large orders can be even more significant.
As a specific illustrative example, a dozen fresh oysters ordered from a specialty dealer may cost $16.00 a dozen. However, in one example, to keep the oysters fresh for consumption upon delivery, they must be shipped overnight and be packed in Styrofoam with dry ice. Consequently, while the oysters may only cost $16.00 a dozen, the shipping is $36.00, or $3.00 an oyster. However, if ten dozen oysters were ordered, the same shipping cost of $36.00 is incurred so that the shipping cost per oyster drops to $0.30 per oyster, an effective saving of $2.70 per oyster.
In some cases, sellers also offer discounts to regular customers who buy their products on a periodic basis with a defined regularity and/or minimum amount being purchased in a given period of time. In addition, many sellers have minimum order requirements, again both in terms of cost and/or in terms of quantity. In these cases, a consumer desiring less than the minimum order amount is faced with the choice of either buying more of a product than he or she desires, thereby essentially paying more per desired unit, or forgoing the purchase all together.
While the large order discounts discussed above are often significant, and therefore highly desirable by all consumers, many consumers simply do not need or want the threshold quantities of a given product and/or service, and/or do not have the means to spend the threshold amount of money, required to receive the large order discounts. As a result, many consumers either forgo the purchases altogether or pay a premium for not being a high volume consumer. This is not only an unfortunate situation for the individual consumer, but the seller also loses potential business. In addition, as noted above, in some cases, the inability to obtain large order discounts can result in a relatively small business being unable to compete with the higher volume “big box” stores and, in many cases, being priced out of business altogether.